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Yes, because housing isn't just about any "supply", it's the right kind of supply. In car terms : If companies only built Lamborghinis and Ferarri's, cars woul

Yes, because housing isn't just about any "supply", it's the right kind of supply. In car terms : If companies only built Lamborghinis and Ferarri's, cars would never be affordable for regular people. Even if you built 1 million of them, you'd never end up with the Yaris or Camry or other regular cars that the market actually needs. Increased supply can drive up prices, if your increasing the wrong kind of supply. This is the same problem we see in cities today. Developers build exclusively super-ultra-high-end housing. If we loosen restrictions, Developers will just build more exclusively-ultra-high-end-housing. Sure, your wealthy folks will save 5% on housing costs as supply increases and the cost of "ultra-high-end" housing drops. But the 95% of regular folks will still forever be priced out of the market. It will take 60+ years before ultra-high-end housing becomes affordable enough for a regular person to afford it. To solve the gentrification problem this article mentions ("to stop gentrification steadily erode opportunities for ordinary, middle-class people") we have to start by building urban housing for ordinary, middle-class people. Something no city in America is currently doing.

aninhumer 10y ago
>If companies only built Lamborghinis and Ferarri's, cars would never be affordable for regular people. This is nonsense. If companies produced exclusively luxury products in excess of demand, they would become affordable because that's the only way they'd be able to sell them. Of course that wouldn't be profitable, so they don't do that. Houses aren't expensive because they're "luxury", they're expensive because they're scarce. Building "urban housing for ordinary, middle-class people" doesn't help much if there are still lots of rich people who want to live there.
hx87 10y ago
> If companies only built Lamborghinis and Ferarris, cars would never be affordable for regular people. The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. To extend your analogy, if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars!
- maxsilver 10y ago
  > The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. Because the market for high end is much more profitable. The question isn't "how do we ensure builders are profitable as possible". We know how to do that, everywhere does that every single day. The question (from the article) is "how do we prevent cities from eroding opportunities for ordinary, middle-class people". My answer is "we need to just start building housing for ordinary middle-class people". Everyone wants to frame this in economic terms that make it rational for a for-profit company to do this. That seems silly to me, we all already agree it's not the most profitable action. But that's ok -- a city government's goals are supposed to be in the interest for it's citizens and region, not in the interest of profitability. > if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars! This assumes everywhere is San Francisco. Even where there is no building limits, there is no shortage of land, and there's comparatively no review process -- density is still 2x-4x the cost. Even out here, developers make so much more money selling 1 high-end unit, than 5 mid-range units, that the vast majority never bother with low-end. Most "free markets fix everything" arguments hinge on this future hope that builders eventually exhaust the high-end market and look to the working-class market. I don't think that will ever happen -- every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes.
  - Kalium 10y ago
    The City and County of San Francisco currently pays roughly a million dollars a unit to build apartments. Not luxury apartments - apartments in general. This is perhaps less than ideally scalable. We don't need to build housing for "ordinary middle-class people". We need to build housing, period. There's not any need for builders to "exhaust the high-end market and look to the working-class market". There's already huge swaths of SF full of units perfect for the working-class market. That's what they would be if there were other units for people at the high-end of the market to be in. If you don't know SF at all, just be aware that there are very large neighborhoods that are stuffed absolutely full of what in a sane market would be working-class units.
jessaustin 10y ago
I tried to imagine a developer being able to pay the interest on the debt incurred building all these hypothetical unsold luxury properties for years and years, and then I realized: this implausible situation is inevitable once interest rates are negative as it seems they are destined to become. Truly 'maxsilver you have seen the future.
- ktRolster 10y ago
  Interest rates are not going to be negative. The only reason government bonds have been able to go negative is because of buying by governments (quantitative easing) and by banks who get political advantages for doing so.
  - jessaustin 10y ago
    Yes that was an attempt at humor. The mattress has offered 0% for a long time, and it will take several rounds of redenomination to convince most people otherwise.
- maxsilver 10y ago
  > all these hypothetical unsold luxury properties for years and years I never said they were unsold. They sell. That's not the problem.
  - jessaustin 10y ago
    The problem, then, is that the wrong people are buying property? In that case I don't see why you introduced the issue of luxury at all. If supply is limited, all purchasers will be rich. That's basic. If rich people wanted to live in SF (and it seems they do), and the only housing on offer were in one of fourteen tar-paper shacks, those fourteen shacks would each sell for millions of dollars.

aninhumer 10y ago

>If companies only built Lamborghinis and Ferarri's, cars would never be affordable for regular people. This is nonsense. If companies produced exclusively luxury products in excess of demand, they would become affordable because that's the only way they'd be able to sell them. Of course that wouldn't be profitable, so they don't do that. Houses aren't expensive because they're "luxury", they're expensive because they're scarce. Building "urban housing for ordinary, middle-class people" doesn't help much if there are still lots of rich people who want to live there.

hx87 10y ago

> If companies only built Lamborghinis and Ferarris, cars would never be affordable for regular people. The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. To extend your analogy, if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars!

maxsilver 10y ago
> The question is then /why/ would companies only build Lamborghinis and Ferraris when there is such a huge market for Hondas and Fords. Because the market for high end is much more profitable. The question isn't "how do we ensure builders are profitable as possible". We know how to do that, everywhere does that every single day. The question (from the article) is "how do we prevent cities from eroding opportunities for ordinary, middle-class people". My answer is "we need to just start building housing for ordinary middle-class people". Everyone wants to frame this in economic terms that make it rational for a for-profit company to do this. That seems silly to me, we all already agree it's not the most profitable action. But that's ok -- a city government's goals are supposed to be in the interest for it's citizens and region, not in the interest of profitability. > if all manufacturers were collectively allowed to build only 10,000 cars a year, and each one of those were subject to neighborhood review and potential lawsuits, /of course/ they will build only luxury cars! This assumes everywhere is San Francisco. Even where there is no building limits, there is no shortage of land, and there's comparatively no review process -- density is still 2x-4x the cost. Even out here, developers make so much more money selling 1 high-end unit, than 5 mid-range units, that the vast majority never bother with low-end. Most "free markets fix everything" arguments hinge on this future hope that builders eventually exhaust the high-end market and look to the working-class market. I don't think that will ever happen -- every builder in the nation could continue building high-end-only indefinitely and still never run out of work in our lifetimes.
- Kalium 10y ago
  The City and County of San Francisco currently pays roughly a million dollars a unit to build apartments. Not luxury apartments - apartments in general. This is perhaps less than ideally scalable. We don't need to build housing for "ordinary middle-class people". We need to build housing, period. There's not any need for builders to "exhaust the high-end market and look to the working-class market". There's already huge swaths of SF full of units perfect for the working-class market. That's what they would be if there were other units for people at the high-end of the market to be in. If you don't know SF at all, just be aware that there are very large neighborhoods that are stuffed absolutely full of what in a sane market would be working-class units.

jessaustin 10y ago

I tried to imagine a developer being able to pay the interest on the debt incurred building all these hypothetical unsold luxury properties for years and years, and then I realized: this implausible situation is inevitable once interest rates are negative as it seems they are destined to become. Truly 'maxsilver you have seen the future.

ktRolster 10y ago
Interest rates are not going to be negative. The only reason government bonds have been able to go negative is because of buying by governments (quantitative easing) and by banks who get political advantages for doing so.
- jessaustin 10y ago
  Yes that was an attempt at humor. The mattress has offered 0% for a long time, and it will take several rounds of redenomination to convince most people otherwise.
maxsilver 10y ago
> all these hypothetical unsold luxury properties for years and years I never said they were unsold. They sell. That's not the problem.
- jessaustin 10y ago
  The problem, then, is that the wrong people are buying property? In that case I don't see why you introduced the issue of luxury at all. If supply is limited, all purchasers will be rich. That's basic. If rich people wanted to live in SF (and it seems they do), and the only housing on offer were in one of fourteen tar-paper shacks, those fourteen shacks would each sell for millions of dollars.